Vietnam interest rates to cool down in 2023

Interest rates in the Vietnamese banking system are forecast to decrease in 2023 when macro conditions improve.

Right after the Lunar New Year (Tet) holiday, deposit interest rates at many banks cooled down. On the official websites of banks, the rates of more than 10% per year are no longer seen, and instead, the highest levels are 8.6-9.5%.

The highest deposit interest rates are still offered by banks with small charter capital or under restructuring and special control like Saigon Bank, CBBank, OceanBank, GPBank, NCB, PVcomBank and Viet Capital Bank.

The rate of 9.5% per year is the ceiling level that commercial banks have committed to at a meeting in late December 2022 amid soaring deposit interest rates, reaching 10-11% per year at a time. The move to reduce deposit interest rates is to support banks to ease lending rates to aid the economy.

At a conference on real estate credit on Wednesday, representatives of some major state-owned banks revealed that right before the event, the CEOs of commercial banks had met and agreed to cut deposit interest rates for lending rate reductions.

Current deposit interest rates of state-owned commercial banks are quite low compared to those offered by private ones. For example, the 12-month interest rate applied by most commercial banks is 8.6-9.5% per year, while for state-owned bodies it is 7.4%.

Banks have yet to update their new interest rates after the conference.

Nguyen Quoc Hung, general secretary of the Vietnam Bank Association, said that banks are carefully calculating the levels of interest rate reduction in the context of the U.S. Federal Reserve’s (Fed) latest rate hike of 0.25 percentage points and rising domestic inflation pressure as the prices of gasoline, electricity and many other consumer goods continue to go up.

According to experts, interest rates are likely to fall in 2023 thanks to more favorable macro conditions. In its recent analysis report, broker Bao Viet Securities said it expects interest rates to drop this year, with clearer signs from the second quarter, when the Fed stops raising interest rates and Vietnam's inflation cools down.